Chapter 7 of the bankruptcy code is sometimes also known as “liquidation,” “straight bankruptcy,” or “fresh start.” In general, debtors (that’s you) who fall at or below the median income level for their communities can take advantage of this chapter. Under Chapter 7, most, if not all, of a debtors’ debts are discharged. Discharge is a legal term meaning forgiven. Discharged debts are not restructured or repackaged—they are erased. This is how the “fresh start” name came about. Once the debts are discharged and the case is closed (about 120 days, usually) all the eligible debts are gone. Forever.
Some debts are not eligible for discharge, such as child support obligations, student loans and some back taxes. Please call us to discuss your situation and to find out if your debts are dischargeable under Chapter 7.
Whether or not a debtor is eligible for protection under Chapter 7 is a calculation based on a number of factors, including income, expenses and debt level. You will sometimes hear this referred to as the “means test.” A bankruptcy attorney can advise a debtor on the availability of this type of debt relief after gathering some basic information during a consultation. Please call to discuss your options with respect to Chapter 7.